DiNapoli: Mismanagement at Greece CSD Led to
$2.5 Million in Overspending and $300,000 in
Extra Payments to Administrators

A general lack of board oversight over capital projects and operations at Greece Central School District led the district to spend approximately $2.5 million more than approved by voters on a capital project, pay more than $300,000 in extra compensation to departing administrators and miss out on about $560,000 in revenue, according to an audit released today by State Comptroller Thomas P. DiNapoli.

“School board members are elected to carry out the fiduciary responsibilities of a school district,” DiNapoli said. “This responsibility should not be treated lightly. Former officials at Greece Central School District did a disservice to local taxpayers by failing to monitor a $120 million capital project and the district’s financial activities. Current board members and school officials have committed to fixing the past problems and are working to restore the taxpayers’ trust.”

Auditors found costs for the capital improvement project, which included renovations to 20 schools, exceeded the voter-approved maximum cost by approximately $2.5 million. The project is now three years overdue and still not complete. Vague contract language contributed to a $1 million cost overrun when the district paid the project manager nearly 25 percent more than the original terms of the contract. The board did not approve the $1 million increase in payment. The district intentionally shifted the cost overage to the general fund to give the appearance that the project was within budget.

Auditors determined oversight of the project was poor and the board gave a “blank check” to the superintendent to manage the project. Problems auditors uncovered for the project include:

The district paid $267,000 for musical risers and six wheelchair lifts that were never used and are now costing taxpayers $2,640 a year to store.

The district hired an employee to oversee the project but failed to provide this individual with the authority and information he needed. As a result, this employee quit.

The district’s claims auditor approved $1.7 million in claims without approval by the architect that the work had been properly performed.

2,400 change orders were processed in part because of inadequate planning and poor communication between the district and the contractor. Change orders must be completed when there is an addition or deletion to the scope of work or any changes in contract price for the project.

District officials intentionally split change orders processed in the same day for the same contractor so the orders were below the $20,000 threshold for board review.

The district is engaged in legal action with contractors because of incomplete or unsatisfactory work.

In addition, the audit found the district paid its officials more than $300,000 in extra compensation at taxpayers’ expense because the board did not ensure contracts clearly defined benefits and failed to monitor the appropriateness of supplemental agreements with school officials.

Included in the $300,000 in additional payments are:

$175,000 in vacation payouts to 19 employees who left the district. These employees received payouts for a full year’s vacation days rather than pro-rated payouts even though the employees were only employed for part of the year. $50,000 of these payouts went to the former superintendent and two other administrators who worked just one week of the new fiscal year;

$51,000 in severance payments to two employees without board approval;

$45,000 in retirement incentives to two officials even though they were not eligible for the incentive; and

$25,000 in 51 additional sick days granted to one administrator.

Auditors also discovered the district missed out on an estimated $560,000 in revenue because the district and its vendor did not claim all Medicaid reimbursements the district was entitled to.

The audit identifies 22 recommendations for school officials including:

monitor capital project expenses to ensure they remain within the authorized limits;

develop internal controls to ensure that the district complies with board policies;

actively oversee change orders for capital projects;

appoint a claims auditor who is independent of the district’s business office;

ensure that additional compensation is properly authorized by the board; and

establish comprehensive policies and procedures to ensure all Medicaid claims comply with regulations, are properly documented and are submitted in a timely manner.

The district generally agreed with the audit’s findings and has already begun to implement corrective action. The district’s full response is included in the audit.

School District Accountability
In order to improve accountability of the state’s schools, DiNapoli’s office will audit all of New York’s 834 school districts, Board of Cooperative Educational Services (BOCES) and charter schools by 2010. The State Comptroller’s office has completed 400 school audits and approximately 200 school audits are currently underway.